3. Suppose that the profit function of a firm is given by: П [w° +r°]™° where p is the output price, and w and r are the input prices of labor and capital respectively. a) Prove the homogeneity property of the profit function. b) Derive the output supply and input demand functions for K and L.

3. Suppose that the profit function of a firm is given by: П [w° +r°]™° where p is the output price, and w and r are the input prices of labor and capital respectively. a) Prove the homogeneity property of the profit function. b) Derive the output supply and input demand functions for K and L.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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